Despite early reports that the National Security Agency's PRISM program would severely dampen the U.S. enterprise cloud industry for the foreseeable future, other figures show that this is not necessarily the case.
Earlier this year, former Booz Allen Hamilton consultant Edward Snowden shocked the international community by exposing the details of the NSA's massive cyber surveillance program. In the aftermath of that report, some international and multinational firms voiced concern about the security of their data with domestic enterprise cloud providers. Some industry analysts predicted that the scandal would cause organizations to view non-U.S. providers in a far more positive light than in the past, when the U.S. was clearly seen as the global leader of the industry.
In particular, an August report from The Information Technology & Innovation Foundation predicted that U.S. cloud firms could stand to lose between 10 and 20 percent of their business to competitors with facilities in Europe and Asia by 2016, with the financial fallout from such a migration totaling between $21.5 billion and $35 billion. In addition, as of August 9, a reader poll conducted by TechWeekEurope found that 62 percent of respondents said they would move their data off U.S.-based cloud servers.
Why a U.S. cloud service provider has little to fear
Although the statistics compiled by TechWeekEurope and ITIF have caused many cloud service providers to predict massive financial losses, other numbers show that the U.S. cloud industry is as robust as ever. For one, ITIF noted that it is still too early to tell what will actually happen, as much of what could actually unfold between now and 2016 that could affect adoption trends.
In addition, the most recent numbers from the Uptime Institute's annual data center survey indicated an overall growth of the domestic hosted services industry, with data centers investing in more upgrades to account for rising cloud demand.
"One of the most significant points in the survey, data center budgets are growing overall, but the vast majority of growth is occurring in the third party providers, reflecting a shift in spending away from enterprise-owned data centers and toward outsourced options," said Matt Stansberry, Uptime Institute director of content and publications. "This isn't the end of the enterprise-owned data center, but it should serve as a wakeup call."
The one impact from PRISM that U.S. cloud providers should expect, according to GigaOM contributor Jordan Novet, is that companies will be more likely to scrutinize the amount of security built into a specific cloud-hosted asset. The PRISM scandal has caused a number of enterprises to rethink how they judge data privacy, and, as such, a good cloud service provider should be able to address these rising concerns.
Due in part to this shift, enterprise-class cloud computing may further emerge as the best option for organizations over public clouds, due to the added security and privacy that can be had via a dedicated hosting environment. Corporations, especially those with operations in the U.S., are still going to want scalable and flexible infrastructure and IT service delivery, meaning that global demand for the cloud is likely to keep North America's industry humming. What PRISM is guaranteed to change, however, is the role security and privacy will play in the decision-making process.